The court of appeal in Stenehjem v. Sareen, 226 Cal.App.4th 1405 (2014) recently revisited the question of when aggressive or belligerent pre-litigation negotiations cross the line from “veiled threats” to criminal extortion. Once determined to be the crime of extortion, the statements are not protected speech under the litigation privilege in Civ. Code section 47 or under the anti-SLAPP statute in Code Civ. Proc. Section 425.16. But how do you know in advance where that line is?
The communication in Sareen was an email from the client to his employer in which threatened to expose the President to federal authorities for alleged violations of the False Claims Act. The allegations of wrongful acts may have been true and the email did not identify the specific criminal behavior. Normally reporting criminal activity would be a valid exercise of civic duty, but in the context of a dispute, the motive for doing so may be the elements of the crime of extortion. It is obvious that threatening an administrative claim or making a criminal complaint that might be otherwise justified by the adverse party’s behavior, cannot be tied to a demand for something in return from the adverse party, it could be extortion as a matter of law because one cannot use threat of criminal process to collect a debt. Here the court was more focused on the context of the communication and held that vague, veiled threats or innuendo are equally actionable. So what if you just mention that you know of facts of wrongful behavior by an adverse party in the context of dispute between your client and that party, but say nothing more? This may cross the line because all that is needed to constitute extortion is language from which a threat can be implied. The crime may be complete whether or not a demand for a specific sum of money or result is made. The threat need not be apparent from the face of the communication or even necessary that it be implied from the language.
Gratuitous comments about bad behavior that is not relevant to the dispute at hand but would be embarrassing to party should never be made. This is not to suggest that identifying specific wrongful behavior of the opposing party cannot be used if it is germane to the dispute at hand, it just cannot be inferred that the failure to resolve the claim of your client could lead to consequences i.e. public disclosure or worse, other than civil litigation with your client. Lawyers are prohibited by the Rules of Professional Conduct from threatening reporting criminal conduct, but your client should also be cautioned not to deliver that message, either verbally or in writing. If you feel that it is important enough to raise such issues in the context of representing a client, get a second opinion on the letter or email on whether the subject should even be raised, before you make any comment, and counsel your client not to do it without your prior approval. If you get “dirt” on an adversary, there is a temptation to use it for the client’s advantage, resist the urge unless it is relevant to the dispute and do so cautiously by carefully considering your motives in using it.